Which rate relationship is required for a refund of accumulated credit under Section 54(3)(ii) of the CGST Act, assuming the supplies and applicant otherwise qualify?
Question and options
Which rate relationship is required for a refund of accumulated credit under Section 54(3)(ii) of the CGST Act, assuming the supplies and applicant otherwise qualify?
Output supplies are zero-rated
Input tax rate is less than output tax rate
Inputs are exempt but outputs are taxable
Input tax rate is higher than output tax rate
Answer and explanation
Correct answer: D - Input tax rate is higher than output tax rate
Section 54(3)(ii) of the CGST Act allows refund of unutilised credit where it has accumulated because the rate of tax on inputs is higher than the rate on output supplies, other than nil-rated or fully exempt supplies and notified exclusions. Refund for zero-rated supplies made without paying tax arises under the separate limb in section 54(3)(i).
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